First things first!
If you are looking to enjoy some tax benefit on personal loans, then you should know that there is no direct tax benefit as such on them.
But if you can use the personal loan amount for some specific purposes, then you can avail a few tax benefits.
On that note, let’s check out the tax benefit on personal loans in this short post.
1. If you invest the loan money in business expansion
By investing the loan amount in business expansion, then you can claim interest paid as an expense. It will bring down your tax liability and also reduce the net taxable profits of the invested business. In this case, there is no cap on the amount that you can claim as the tax benefit on personal loans.
2. If you invest in the purchase or the construction of the residential property
You can also avail tax benefit on personal loans if you have used the money for the purchase and the construction of the residential property. The section 24 (b) of the Income Tax Act lets you pocket personal loan tax benefits. If the amount is used to purchase a home which is occupied by you, then the maximum tax deductions is up to Rs.2 lakh. If the house is rented, then there is no cap on the amount that you can claim.
3. If you invest the amount in assets
You can also enjoy tax benefits on personal loans if you invest the money in buying assets like shares, specific stocks, jewellery and non-residential property.
You are now aware of the ways you can easily avail tax benefit on personal loans. Based on your type of usage of the loan money, you can claim personal loan tax benefits.
Bajaj Finserv offers pre-approved personal loan offers and more to simplify the loan processing and save your time.
You can discover your pre-approved loan deals by sharing your primary details like the name and mobile number.